Legal

What is an International Business Company (IBC) / Offshore Company?

In simple terms, an international business company is a normal limited liability company which is used as a tool, legally, by corporations and individuals throughout the world to direct profits out of high tax countries into other jurisdictions or international financial centers thus taking advantage of low or zero tax and double tax treaties. The beneficial ownership and business activities of the international enterprise in general lie outside the country of its registration.

What are the benefits to consider setting up and where an offshore company?

The benefits to be consider when choosing to set up and in which jurisdiction an Offshore Company can be summarized as follows:

Low taxation: Most offshore companies pay no local taxes on the income derived from offshore operations, i.e. from activities outside of the jurisdiction of company formation.

Anonymity: Registrars in most offshore jurisdictions do not disclose information about directors, shareholders and beneficiaries of offshore IBC companies.

Asset protection: In the international business context, it is usually the laws of the jurisdiction of incorporation that are applied, rather than those, where the company is being sued. Many offshore jurisdictions are renowned for their favorable asset protection laws.

In which jurisdictions can offshore companies operate?

Offshore incorporation can be carried out in a number of jurisdictions, including Cyprus, Anguilla, BVI, Belize, Seychelles, Panama.

Which are the international business activities?

There are a number of business activities which are best suited to be operated through an international entity, thus taking advantage of the opportunities offered. Examples of such activities are listed below (the list is by no means exhaustive):

International trading (an international company can be used as intermediary to re-invoice exports and imports)

International services companies (re-invoice services through an international company)

International construction and / engineering companies

International transport/distribution companies

Royalty companies

Real estate companies

Shipping and ship management companies

Commission agents

E-business

Holding companies (receiving dividends from foreign subsidiaries)

Which are the criteria for choosing a jurisdiction?

The choice of a suitable jurisdiction is an important decision and requires careful considerations. The most important aspects to be examined may be outlined as follows:

Political and economic stability of the jurisdiction

The availability of a modern and flexible legislative framework

Simple incorporation and filing requirements

The availability of Double Taxation Treaties – this is very important in order to minimize withholding taxes on the payment of dividends and royalties from contracting states

The availability of good caliber professional advisers

A good banking system

Good telecommunications

Reputation (some “tax havens” are viewed with suspicion).

Important Note: Professional advise should always be sought before acquiring an international entity so that you are aware of any restrictions and reporting requirements.

What is the registration procedure for set up an International Business Company in Cyprus?

An International Business Company (IBC) is the term commonly used for a Cyprus company which has foreign shareholders. An IBC can either be resident in Cyprus (provided its management and control is in Cyprus) or it can be non-resident (if its management and control is outside Cyprus).
Further an IBC can either operate from a fully-fledged office with permission to employ expatriate staff or it can have its registered office at the office of a local accountant, lawyer or administrative service provider.
The basic steps and information required for the formation of an IBC are outlined below:

An application form / questionnaire is usually requested by the service provider to collect a range of information.

Proposed company names are submitted to the Registrar of Companies for approval.

A brief description of the main activities of the company is required to enable the drafting of the memorandum and articles of association.

There must be a minimum of one shareholder. If anonymity is required, the shares may be held by a nominee or trustee.

There must be at least one director.

A company secretary must be appointed and a registered office address in Cyprus must be specified (required by law).

Full know-your-client information is required for all beneficial owners such as passport copies, proof of address, bank references and short CV.

What are the advantages of incorporating a Holding company in Cyprus?

There is a plethora of advantages surrounding the incorporation of a holding company in Cyprus. The island is situated at the crossroads of Europe, Asia and Africa and also forms a gateway to the oil-rich Arab states and the rest of the Middle East. The Island also has a state of the art telecommunication infrastructure, low operating costs, multi lingual and high skilled human capital, and excellent banking systems. As a holding company, a non resident can benefit from the following tax advantages:

A uniform 12.5% corporate tax rate is applicable to the worldwide income on all resident companies. This is the lowest corporate tax rate in the EU and thus the most advantageous standard rate of corporation tax for Cyprus. The taxation status on a Company is residence-based. A company is only ‘resident in Cyprus’ if its business is centrally managed and controlled in Cyprus. Therefore, under the relevant rules, a resident corporation is taxable on its worldwide income accrued or arising from sources both within and outside Cyprus if it is managed and controlled from Cyprus.

There is no capital gains tax payable on the sale or transfer of securities and the gains are exempt from Income Tax. (This does not apply when the Company owns real estate in Cyprus) Consequently, no tax arises on the disposal of participations held by the Cyprus Holding Company or the disposal of the shares of a Cyprus Holding company or the liquidation of the Cyprus Holding Company owned by non residents.

Dividends received from Cyprus or non Cyprus companies are exempt unless more than 50% of the payer’s company’s activities derived from investment income or the tax burden in the payer’s country is substantially lower than the Cyprus tax rate (less than 5%).

Profits from a permanent establishment abroad are exempt from corporation tax, subject to exemptions.

There are no withholding taxes on the distribution of profits by way of dividend payments to non residents irrespective of whether the recipient is a corporate body or an individual and irrespective of the country of residence or the existence of a double tax treaty.

Corporate tax losses can be carried forward indefinitely or they can be set off against profits incurred from companies within the same group under group relief. (Two companies are considered for group relief purposes if one is a 75% subsidiary of the other or if both are 75% subsidiaries of a third company).

The Cyprus tax legislation has transposed the Merger Directive into the local income tax law and unlike the Directive itself which provides only for cross-border reorganisations of companies within the EU and is restricted to income tax consequences, it has extended the tax benefits to domestic reorganisations, to cross-border reorganisations with EU member and non EU member states and to reorganisations abroad with tax implications in Cyprus. In accordance with this legislation, no tax consequences arise in the case of a reorganisation involving a Cyprus holding company.

There are no debt / equity ratio requirements in the Cyprus tax legislation. A Cyprus company can be capitalized entirely with loans and any arms’ length interest paid to a parent will be fully deductible.

Register a company in Seychelles

Which is the Governing corporate legislation in Seychelles?

The International Business Companies Act 1994, and the legal system of the Seychelles is based on English Common Law and French Civil Law.

What are the advantages associated with a Seychelles IBC?

Incorporating a Seychelles IBC carries many advantages which are described below. Seychelles IBC’s have increased dramatically both in profile and popularity over the years since over 30,000 Seychelles IBC’s have been incorporated following the enactment of the International Business Companies Act 1994.
One of the major advantages of a Seychelles IBC is the fact that no taxation is levied on income and profits made by an offshore company [IBC]. The International Business Act 1994 specifically states this within Article 109. (1). Additionally, according to Article 109. (2), Seychelles IBC’s are exempt from any stamp duty on transactions regarding their business such as transfers of property to or by the company and on any transactions in respect of the shares, debt obligations or other securities of the Seychelles IBC.
For qualification purposes, a Seychelles IBC may not carry on business in Seychelles, it may not own real estate in Seychelles and it may not do any banking, insurance and registered agent business unless a special licence has been obtained.
Despite the above restrictions, a Seychelles IBC can do the following:

Maintain Seychelles-based bank accounts and deposits.

Maintain books and records within Seychelles.

Maintain professional relationship in Seychelles with attorneys, accountants, trust and management companies, investment advisers or other similar persons.

Hold meetings of its directors in Seychelles.

Lease a property in Seychelles to use as office from which to communicate with members and where books and records can be kept.

Hold shares, debt obligations or other securities in another Seychelles IBC or in a Seychelles domestic company.

Own a vessel or aircraft registered in Seychelles.

Shares in a Seychelles IBC may also be held by a person resident in Seychelles.

For which commonly uses a Seychelles IBC is used for?

The Seychelles IBC is a flexible tax free company ideal for a wide variety of uses. Seychelles IBCs are commonly used for:

the holding / ownership of investments and assets, such as real estate or shares or other property.

commercial transactions and international trading operations

asset protection vehicles

consultancy and personal service companies

How much time is needed to form a company in Seychelles?

Companies can be incorporated within two working days.

Does every Company need to a have a registered office in Seychelles?

A Seychelles IBC is required by law to have a Registered Office in Seychelles. Although, it is not obligatory for a Seychelles IBC to have a secretary, appointment of such secretary is possible.

Which are the financial reposting obligations of a Seychelles’ IBC?

Seychelles IBC’s do not have an obligation to prepare and file any financial accounts. A Seychelles IBC can arrange its accounts in any manner that the owners deem to be appropriate for them.

How much is the minimum and maximum number of shareholders and authorized capital in a Seychelles’ company?

One shareholder is permitted as minimum and there is no maximum number.
There are no minimum or maximum capital requirements regarding Seychelles IBC’s. Normally, Seychelles IBC’s are incorporated with an authorized share capital of $100,000 divided into 100,000 shares of $1.00 each. The authorised share capital may be expressed in any legal currency. A Seychelles IBC can issue registered or bearer shares (not recommended), preference shares, redeemable shares, shares with or without par value and shares with or without voting rights. The minimum issued capital is either one share of no par value or one share of par value.
A Seychelles IBC is not required to have any minimum paid up capital before starting any business operations.

How much is the minimum and maximum number of Directors in a Seychelles’ company?

Sole Directors is permitted and there is no statutory maximum number, although the articles may impose a limit.

Are there any Nationality and residency requirements of directors?

None.

Register a company in British Virgin Islands (BVI)

What is the Governing corporate legislation in the British Virgin Islands (BVI)?

The BVI Business Company Act 2004, (the “ACT”) as amended.

What is the minimum and maximum number of shareholders in the BVI?

A company may be formed without shareholders although at least one shareholder will be required upon commencement of business. There is no maximum number of shareholders provided by the Act.

What is the standard authorized capital?

To qualify for the lowest annual license fee of $350, companies are incorporates with a share capital not exceeding $50,000.

Are there any capital taxes?

None.

What is the minimum and maximum number of directors in a BVI’s offshore company?

A company may be registered without directors. However the 1st Director must be appointed within 6 months of incorporation. Sole directors are allowed and there is no statutory maximum although the articles may impose a limit. Corporate directors are permitted and there are no nationality or residency requirements.

Must the company have a registered presence in the territory of incorporation?

Yes. A BVI IBC must have at all times a registered office and a registered agent in the BVI.

What Information is required to register a British Virgin Islands IBC?

Certified copy of the passport of each beneficial owner by either a lawyer or a notary public or a bank.

Bank reference for each beneficial owner or a professional reference letter by a lawyer or an accountant.

A recent copy of utility bill (not more than 6 months old water or electricity bill) that verifies home address of each beneficial owner.

Personal Details:
Full name;
Address – business and private;
Nationality;
Occupation;
Telephone and telefax numbers (private, home and mobile);
E-mail.

Register a company in Belize

Does the name of the company must be approved?

The company name must be approved before you can proceed with the incorporation of a Belize company.

What is the minimum and maximum number of shareholders?

A Belize private limited company can have a sole shareholder and there is no upper limit to the number of shareholders. No residency requirements for shareholders apply.

What is the minimum and maximum number of directors?

A minimum of one director and unlimited number of directors allowed. The director can be a person or a legal entity. The director can be of any nationality and need not be resident in Belize.

Must the company have a registered presence in the territory of incorporation?

In order to register a Belize company, a local Belize address must be provided as the registered address of the company. The registered address must be a physical address and cannot be a PO Box.

What Information is required to register a Belize IBC?

Certified copy of the passport of each beneficial owner by either a lawyer or a notary public or a bank.

Bank reference for each beneficial owner or a professional reference letter by a lawyer or an accountant.

A recent copy of utility bill (not more than 6 months old water or electricity bill) that verifies home address of each beneficial owner.

Personal Details:
Full name;
Address – business and private;
Nationality;
Occupation;
Telephone and telefax numbers (private, home and mobile);
E-mail.

Register a company in Malta

What is the governing corporate legislation in Malta?

The governing law for Maltese entities is the Companies Act 1995 with the most commonly used form of business entity being the Malta private Limited Liability Company (LLC).

What is the minimum and maximum number of shareholders?

A minimum of two shareholders is required. The maximum number of shareholders for a private company is fifty.

What is the minimum paid-up capital?

The minimum authorized and issued share capital for a private company in Malta is €1,165 (1,164.69) (registry.mfsa.com.mt/otherPDFs/ROCGuide.pdf) with at least 20% thereof paid up upon subscription.

What is the minimum and maximum number of director(s)?

Sole directors are allowed.

Must the company have a registered presence in the territory of incorporation?

Every company registered in Malta must have a registered office in Malta. This may be at the office of a firm of lawyers, accountants or other providers of corporate services. Any changes to the company’s registered office must be notified to the Registrar of Companies.

What Information is required to register a Maltese Company?

Certified copy of the passport of each beneficial owner by either a lawyer or a notary public or a bank.

Bank reference for each beneficial owner or a professional reference letter by a lawyer or an accountant.

A recent copy of utility bill (not more than 6 months old water or electricity bill) that verifies home address of each beneficial owner.

Personal Details:
Full name;
Address – business and private;
Nationality;
Occupation;
Telephone and telefax numbers (private, home and mobile);
E-mail.

Register a company in UK

What is the minimum and maximum number of shareholders of a UK company?

Every limited company must have at least one shareholder. There’s no maximum number. Directors can be shareholders.

Is there a minimum pre-paid capital requirement?

None.

What is the minimum and maximum number of director(s)?

Sole directors are allowed. There is no statutory maximum number of directors although the articles may impose a limit.

What is the governing corporate legislation for a UK Limited Liability Partnership (LLP)?

LLP Act 2000 and the applicable provisions of the Companies Act 2006.

What is the minimum and maximum number of director(s)?

No limit.

Is there LLP taxation?

The members of an LLP are exempt from UK tax only if there is no business or trade carried out with or within the UK.

What information is required to register a UK non-resident/ UK Ltd/ UK LLP?

Certified copy of the passport of each beneficial owner by either a lawyer or a notary public or a bank.

Bank reference for each beneficial owner or a professional reference letter by a lawyer or an accountant.

A recent copy of utility bill (not more than 6 months old water or electricity bill) that verifies home address of each beneficial owner.

Personal Details:
Full name;
Address – business and private;
Nationality;
Occupation;
Telephone and telefax numbers (private, home and mobile);
E-mail.

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